The company is violating a state statute that prohibits auto manufacturers from selling automobiles directly to consumers in the Garden State.

by DANA HULL, MCCLATCHY NEWS SERVICE
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March 12, 2014
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Tesla may be selling one of the world's most acclaimed automobiles, but it won't be selling them in New Jersey, the state declared Tuesday, escalating a noisy, nationwide political brawl over the company's sales model.

The New Jersey Motor Vehicle Commission unanimously ordered Palo Alto-based Tesla to close its two stores in the state on April 1. Tesla has sold more than 600 Model S sedans in the state since those stories opened a year ago, but the commission said the company is violating a state statute that prohibits auto manufacturers from selling automobiles directly to consumers in the Garden State.

Early Tuesday, Tesla blasted the administration of Gov. Chris Christie in a blog post, saying it had "gone back on its word" and was acting on behalf of "a special interest group looking to protect its monopoly at the expense of New Jersey consumers." That would be auto dealers, who have no place in a direct sales model like Tesla's.

But a spokesman for Christie said the company knew full well this day would come.

"Since Tesla first began operating in New Jersey one year ago, it was made clear that the company would need to engage the Legislature on a bill to establish their new direct-sales operations under New Jersey law," said Kevin Roberts, the governor's deputy communications director. "Tesla has been aware of this position since the beginning."

New Jersey is now the third state that has effectively banned Tesla from selling its cars directly to consumers. The other two are Arizona and Texas, which are among the four states Tesla is eyeing for a $5 billion "gigafactory" for batteries.

Tesla needs to sell directly to consumers because electric cars are still a relatively new technology and it uses its stores to educate them about the "new paradigm in automotive technology," the company said in its blog post.

Tesla described the actions of the politically conservative Gov. Christie, who is widely regarded as a potential Republican presidential contender, as "an affront to the very concept of a free market."

Diarmuid O'Connell, Tesla's vice president of business development, issued a statement denying that Tesla had been told "since the beginning" that its license could be revoked.

But Jim Appleton, president of NJ CAR, which represents the auto dealers, said Tesla never should have been granted the right to sell cars in New Jersey in the first place.

"The jig is up," Appleton said in an interview. "Someone at the New Jersey Motor Vehicle Commission screwed up and issued Tesla licenses, and they never should have."

Appleton added that "Tesla is accusing everyone in the world of backroom dealing, yet they indicated they had backroom discussions that led them to believe they could continue to operate."